The Most Fundamental Rally Ever Is Breaking With Fundamentals

The semiconductor and AI-driven market rally is overshooting its fundamental earnings support and showing signs of exhaustion. Nvidia is currently testing key technical levels, which could signal broader sector weakness.

Key Takeaways

• 1.The semiconductor rally has decoupled from fundamental earnings revisions, suggesting it has overshot near-term growth expectations.
• 2.AI-related equities are showing extreme divergence from the broader market, with the GS AI basket up 42% YTD compared to 3-7% for broader indices.
• 3.Nvidia (NVDA) is currently testing critical technical support levels, and its violent correction poses a risk to the entire semiconductor and AI sector.

Table of Contents

• Semis overshooting fundamentals
• Not normal
• The General

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